D.C. Watch: Negotiators discuss billions in budget cuts

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House Republicans' "fiscal cliff" counteroffer to President Obama hints at billions of dollars in military cuts on top of the nearly $500 billion that the White House and Congress backed last year. Even the defense hawks concede the Pentagon faces another financial hit.

The proposal that House Speaker John Boehner, R-Ohio, and other Republican leaders sent to the White House this week calls for cuts of $300 billion in discretionary spending to achieve savings of $2.2 trillion over 10 years. The blueprint offered no specifics on the cuts, although the Pentagon and defense-related departments such as Homeland Security and State Dept. make up roughly half of the federal government's discretionary spending. No hint of ag spending cuts that might be included in the GOP plan.

The added military cuts are something Republicans recognize is the “new reality”, with wars in Iraq and Afghanistan ending and deficits demanding deep cuts."Not too devastating," said Sen. John McCain of Arizona, the top Republican on the Senate Armed Services Committee.

That's especially true compared with the alternative that McCain dreads and other GOP legislators dread; the double hit of automatic tax hikes on nearly every family (averaging $3,600 per family) and automatic spending cuts dubbed the “fiscal cliff”.

We detailed specific impacts on farmers if the fiscal cliff is breached in last week’s report.

If President Obama and Congress are unable to reach a deal this month, the Pentagon would face across-the-board cuts of some $55 billion after the first of the year and nearly $500 billion over a decade. Even Obama’s own Defense Secretary Leon Panetta and military leaders have warned that such a meat-ax approach to the budget would do considerable harm.

"My job is to stop sequestration," McCain said, using the budgetary term for the automatic cuts.

But some fear the President wants to go over the cliff! So far he’s dismissed any GOP offers of compromise that don’t raise tax rates on “the rich”, even GOP offers to generate as much or more in tax revenue by limiting deductions and so-called “loopholes.”

Former Democratic Chairman Howard Dean made headlines over the weekend by openly extolling going “off the cliff” as the best option for the President, in that it would vastly increase taxes on everybody, nearly cripple the Defense Department, throw the country into recession and that Obama could credibly blame it all on “stubborn republicans determined to protect millionaires and billionaires”; the tactic he and even GOP strategists are convinced won him re-election.

Outlook for U.S. trade is “astonishingly bright” according to USDA’s latest Outlook for U.S. Agricultural Trade.

The forecasts continue an astonishing trend for American farm exports that began in 2009. In the years since, U.S. agricultural exports have climbed more than 50% in value, from $96.3 billion in 2009 to the most-recent forecast of $145 billion in 2013.

Said Ag Secretary Tom Vilsack, “As our farmers and ranchers look forward to a new growing season, agriculture will continue to be a major contributor to the President's goal of doubling U.S. exports of goods and services under the National Export Initiative by the end of 2014.

But he was quick to add, “It is important that Congress help ensure that this success continues by passing a comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers, ranchers and businesses, and their millions of customers around the world."

Russia the next focus for U.S. ag export growth: Under Secretary for Farm and Foreign Agricultural Services Michael Scuse was in Russia all week along with representatives from the states of Idaho, Missouri, North Dakota, Oklahoma and Kansas, as well as 21 American companies. Two-way agricultural trade between the United States and Russia was valued at roughly $1.5 billion in fiscal year 2012, with American farm exports accounting for 97% of the total.

Scuse notes that “Today, only one percent of U.S. companies export, and yet ninety-five percent of the world's consumers live outside the borders of the United States, creating significant opportunities for U.S. food and agriculture."


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